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Murdochs survive, but the fallout is serious

Karen Kissane, London

A protest group campaigning against the political dominance of Rupert Murdoch stages a mock burning of a copy of the Leveson Report outside the Queen Elizabeth II centre in London. Photo: Getty Images

ANALYSIS

Prime Minister David Cameron can now afford to exhale. Rupert and James Murdoch — perhaps not quite so easily.

The criticisms of the Murdochs by Leveson are carefully-phrased attacks on their corporate competence and, in James's case, on the accuracy of his evidence to the inquiry.

Mr Cameron now faces a difficult task to build consensus on how best to implement the Leveson principles, given that his deputy, the Opposition and a fair proportion of his own back-bench support the idea of a new press watchdog that is underpinned by law.

Mr Cameron, on the other hand, warns that laws to regulate the press are a danger to freedom of speech. He told the Commons, "In this House, which has been a bulwark of democracy for centuries, we should be very, very careful before crossing that line."

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Whatever political process follows next will be messy and divisive, but Mr Cameron is likely to be relieved that is the worst he has to handle. The Leveson report does not seem to represent a major nightmare for his government (although its 10 kilos and 2000 pages could be consumed in a day only by a wunderkind, so it may contain small landmines that have yet to be discovered).

Here is the good news for Mr Cameron.

Justice Leveson did not savagely criticise former Culture Secretary Jeremy Hunt and his handling of the Murdoch bid for satellite broadcaster BSkyB. He merely rapped Mr Hunt over the knuckles for the unwisdom of appointing garrulous adviser Adam Smith, whose over-friendly communications with News International during the Sky bid process sparked headlines earlier this year.

Justice Leveson did not condemn relationships with red-headed media executives, or loans of horses, or in fact any particular encounter between Mr Cameron and a News International chief. Nor did the judge find that any specific policy by Mr Cameron's government had been unduly influenced by connections with, or fear of, the Murdoch empire.

His condemnation of the undue closeness of politicians with the press was carefully couched in general terms, along the lines of "a pox on all your houses".

The British police got a relatively clean bill of health, with a finding that there was no evidence of widespread corruption in their dealings with the media.

And several key players in the phone-hacking scandal got only the most glancing of mentions. This will be due to the law of inverse proportion that follows any arrest: the deeper the legal doo-doo in which a person stands, the less likely a judge such as Leveson would be to examine his or her conduct in any detail, for fear of imperilling future trials.

The fallout for Rupert and James Murdoch and their empire might be more serious.

The phone-hacking scandal and the inquiry it sparked have left them personas-non-grata in British politics. From figures all sought to win over — some saw them as makers and breakers of British governments — they are now men with whom English politicians cannot afford to be publicly associated. In April, Mr Cameron told Commons, "I think we all, on both sides of this house, did a bit too much cosying up to Mr Murdoch."

The loss of political influence in Britain has been mirrored across the Atlantic by challenges to the family hold on News Corporation in the United States, where institutional investors have been trying to oust Rupert as chairman and his sons James and Lachlan from the board. The rebels have used the phone-hacking scandal, its costs to the company (around $US 244 million) and related inquiries by US authorities to bolster their case.

The criticisms of the Murdochs by Leveson are carefully-phrased attacks on their corporate competence and, in James's case, on the accuracy of his evidence to the inquiry. They will add fuel to the fire of already-angry institutional investors.

In the wake of the phone-hacking scandal and the Leveson inquiry, Rupert Murdoch has resigned a few roles; his son has moved on from News International; and Rupert's beloved newspapers are being split into a separate entity, so as not to sully cleaner and more profitable areas of his empire.

But in the end, does any of that that really matter to a man worth an estimated $US9.4 billion?